Thursday, June 30, 2005

Charles Maxwell of Weeden & Company appeared on Bloomberg TV on June 27, 2005.

His comments, as close as my notes get them:

- Believes that we are temporarily above $60, but that we are now in a permanent range of $45 - $60.- Oil is difficult to find, demand is up every year, and there is no change in consumption patterns.- Something has to give: Price.- Speculation is a big factor in the price, but reasonably so - there is a serious question as to whether we will have enough in the 4th quarter.- Just as bad - the situations in Saudi Arabia, Iraq, Russia and Venezuela.- There may be as much as $10-15 of risk speculation in the price of oil - and justly so.- That premium will stay there until we see a more stable/normal environment, which doesn't seem to be the world we're inhabiting.- He believes there's no chance the US will go into Iran.- There is a real slowing of Russian production growth.- Has no good idea on the futures of Iraq and Venezuela.- The major new source of energy = conservation. Prices will rise, so we will be forced to.- Energy sources in the future: Oil, coal, nuclear. Additionally, solar, wind, tight gas, oil shale and tar sands.- Believes oil price will top out at $62-63, find a floor in the high 40's over the next year or two, and by 2010-2011 be $100.

Stephen Leeb of Leeb Capital Management was on Bloomberg radio on June 27, 2005.

His comments, as close as my notes get them:

- There is nothing to stop the price from rising, there is too little oil, and too much demand.- $60 is not high enough to kill demand, with China, India and US demand continuing to grow.- 80% year over year price increase tends to kill demand, so say $75, but for China and India, even this may not kill demand.- $100 is well within reach.- Since 1998, oil prices have risen nearly 30% a year, this may continue for a long time to come.- Refining capacity is tight, and the producers with the possibilities ofexpanding are Russia, Saudi Arabia, and Iran, so we remain very, very vulnerable both upstream and downstream.- Currently, there is no rapid development of alternatives, but we have been complacent for too long, and it is imperative that we spend massive amounts over the next 5-10 years on alternatives including wind, nuclear, coal gasification, etc.- He believes at some point there will be a dramatic turn towards alternatives, but he is not sure when.

Sunday, June 26, 2005

It's the winning sideAnd everybody's cheering for the winning sideAnd the children leave their homes to join the winning sideAnd when Jesus comes He'll march on with the winning sideAnd we've got all the right answers on the winning side

Fadel Gheit of Oppenheimer - A year ago he said prices were nuts and based on speculation, now he says demand is strong and prices may well go higher.

Lee Raymond of ExxonMobil - Earlier this year he was saying prices were not justified by the fundamentals he saw, now he's saying it may take 2-3 years for prices to work themselves out.

Peter Beutel of Cameron Hanover - Not long ago, he thought the tide had turned against higher prices and prices would turn down to $40, now he's talking demand is high and prices will likely continue higher.

James Cramer of Mad Money - Pushing the drillers and most oil and gas stocks like there's no tomorrow.

Tobin Smith of Changewave Investment - This weekend on Bulls & Bears a raging oil bull. This guy is short term top city.

There has been "much additional talk" this week about the "strain of keeping up with demand for crude oil, which grew 3.5% in 2004 and is generally expected to slow to 2.2% to 2.3% this year," Tim Evans, a senior analyst at IFR Markets wrote in a note to clients.

The market exhibits an "appetite for ever higher inventories that has lapped up an additional 24.2 million barrels of [Energy Department] commercial stock over the past year along with 33.7 million barrels that flowed into the U.S. Strategic Petroleum Reserve," he said.

Given that, traders have also been "led to believe that our creaking infrastructure of pipelines and refineries is being stretched to the breaking point," he said.

But Evans pointed out that despite the market's appetite for oil, "there is still no sign of supply disruption or physical shortage."

Saturday, June 25, 2005

China is floating in a sea of dollars, but would rather float in a sea of oil. Incidentally, I just read in US News & World Report that the line for the Beijing Ikea parking lot is "almost an hour long, the norm for the weekend".

CNOOC's bid for Unocal puts the world on notice that China is ready to go head-to-head with oil-industry giants in a worldwide scramble for energy, analysts said Thursday.

The notice landed late Wednesday, when China's biggest offshore oil company, announced a formal bid for Unocal Corp., offering $18.5 billion for the California oil and gas producer.

The move pits China National Offshore Oil Company Ltd. (CEO: news, chart, profile) against U.S. giant Chevron Corp., (CVX: news, chart, profile) , which agreed April 4 to buy Unocal (UCL: news, chart, profile) in a deal Chevron had hoped to seal within the next several weeks.

"We have the feeling that the CNOOC/Chevron competition is just Round One in the fight for strategic energy resources among the world's leading energy organizations, including those in developing countries," Bernard Picchi, analyst at Foresight Research Solutions in New York.

A CNOOC-Unocal merger would also require paying Chevron a $500 million breakup fee.

If approved, a Unocal acquisition would more than double CNOOC's oil and gas output and boost its proven reserves by 80% to 4 billion barrels of oil equivalent.

The news sent all three companies' share prices higher in afternoon action Thursday.

CNOOC chairman and CEO Fu Chengyu said he's confident the company's proposed merger with Unocal will be positively received in the United States.

"People need to understand this is a purely commercial transaction driven by market forces and consideration," Fu was quoted as saying.

Billionaire investor Warren Buffett said his Berkshire Hathaway Inc. is willing to invest more money in the U.S. energy sector than the $10 billion to $15 billion he previously discussed and said he sees more opportunities in the utilities industry, including nuclear power.

In an interview, Mr. Buffett didn't specify how deeply into Berkshire's pockets he would dig. But he made it clear that Berkshire will invest more. "The bigger, the better," he said. "It's better to do a $10 billion deal than 10 $1 billion deals."

In the interview, Mr. Buffett said he is keeping an "open mind" about investing in a new generation of nuclear-power plants that wouldn't create air pollution. Even if there is debate about global warming and the power industry's culpability, Mr. Buffett said, "the price of making a mistake [by not acting] is such that you should err on the side of the planet."

Warren Buffett bringing up the nuclear option, after his notable skitishness about nuclear terrorism? Is the old man getting daft? Does he know something we know?

After all, why not natural gas, which is fairly clean and much less controversial? The price of natural gas is probably the driving factor.

Why not coal; the new technology is much cleaner, and it's also less controversial? I don't know. Does he suspect coal may be too expensive over the lifetime of the plant to ensure a viable return?

Royal Dutch/Shell Group's chief executive said the company is on track to boost oil and natural-gas production about 30% in the next decade, as a number of big projects already in the works come on line and as Shell bolsters its exploration-and-production business with new finds.

Jeroen van der Veer reiterated the company's earlier projection that Shell expects flat production in the next few years, a problem shared by some other major oil companies.

But in a news conference here yesterday, he said Shell aims to identify and develop as many as 10 large projects that will boost output by 2015. Shell is developing three such projects, with some new production expected as early as this year.

Mr. van der Veer didn't specify how Shell would find all the projects or where they might be. He characterized such projects as requiring multibillion-dollar investments, and said they also could include "downstream" deals, related to businesses such as refining, not just production projects. Such big projects are becoming more common among superlarge oil companies like Shell as they compete with state-owned companies and smaller producers for new hydrocarbon sources.

By 2015, Mr. van der Veer said, he expects Shell to be pumping the equivalent of five million barrels of oil a day, up from about 3.85 million barrels a day in the first quarter of this year. That growth won't kick in for several years, he said, noting that the increases will be "very much back-end loaded," while for the next several years production levels will reflect a "quite horizontal picture." Output will start building by 2008 or 2009, he said.

Oil tycoon Boone Pickens' bet that energy prices would rise made him more money in the past five years than he earned in the preceding half century hunting for riches in petroleum deposits and companies.

And even as crude futures have doubled since 2000 to almost $60 a barrel, the 77-year-old Texan sees no reason to take his chips off the table. "I can't tell for sure where we're going, other than up," Pickens said in an interview with The Associated Press.

Pickens does not believe the current tightness in the oil market will be resolved by a surge in supply, and he sees $50 a barrel as a price floor. When he does the arithmetic — the world will consume more than 30 billion barrels of oil in 2005 — Pickens is convinced that OPEC and the rest of the petroleum industry will never again be able to build a sufficient supply surplus to give the market a psychological cushion. Even if the world can produce more — Saudi Arabia claims to have reserves of 250 billion barrels — limited refining capacity will continue to be a problem, he said.

At the moment, the world's excess production capacity is about 1.5 million barrels per day, or less than 2 percent of total global consumption. That has traders extremely nervous about the possibility of hurricanes, terrorist attacks and labor strife in key oil production regions.

Only one thing could undermine his position as a market bull: a sharp drop in energy use, either from an economic recession or because skyrocketing prices get people to think twice about taking a long drive. Pickens believes the United States and other industrialized nations are in for a rude awakening within the next year as oil producers struggle to keep up with growing demand in the United States, China and India.

"You're going to hit a brick wall is what's going to happen," said Pickens, who foresees oil prices above $60 a barrel oil and gasoline at $3 a gallon.

Longer term, he expects very high prices to change consumers' habits. Already, he said, "you're coming to the end of the SUVs as far as being center stage."

Peak-oil proponents are not saying that the Earth's store of crude is nearly gone. Rather, they say it is nearly half gone, and daily production will begin slowing - while growth in demand continues, according to Deffeyes.

"I'm very concerned about the five-year time scale. There's not much we can expand rapidly on a five-year time scale" to make up for a shortfall in oil, he said in a recent interview at his home in Princeton.

But Cambridge Energy Research Associates asserted just the opposite yesterday in a report predicting that oil production capacity could exceed demand by more than six million barrels per day by the end of this decade - far above the current margin of one million barrels per day.

That projected capacity increase could push prices below $40 a barrel again by 2007 or 2008, the Cambridge, Mass., firm said.

Cambridge Energy expects major new contributions from Russia, the Caspian Sea region, and West Africa. Unconventional crudes, such as extra-heavy oil, oil from wells drilled below more than 2,500 feet of seawater, and other liquid hydrocarbons will increase to 30 percent of total production capacity in 2010, up from 22 percent now, the company said.

Cambridge Energy predicted that much of the increase in supply will be light, sweet crude oil - good news for Philadelphia-based Sunoco Inc., whose refineries are designed to process that type of oil.

Peter M. Jackson, Cambridge Energy's director of oil industry activity, acknowledged during a teleconference with reporters yesterday that last year's discovery of 13 billion barrels of new oil worldwide did not nearly offset the 30.7 billion barrels pumped out of the ground. That propels the belief that rapid depletion is at hand.

But that is not the case, Jackson said, because upgrades and expansions of existing fields have made them capable of producing more oil than was previously thought possible.

Cambridge Energy does not see a peak in overall production until around the middle of the century. Even then, it will be an "undulating plateau rather than a peak," he said.

Deffeyes, however, does not buy predictions that production can keep increasing for decades, especially since in 1986 the world began burning more oil annually than it was finding.

Although oil production has continued increasing worldwide, discovery of new oil reserves has been in a relentless decline for 40 years.

"There are a few juicy places," said Deffeyes, who worked for Shell Oil in the 1950s before leaving for an academic career. Among those places are Russia, where political instability is a serious concern, and Iraq, which is the only Middle Eastern country that has not been thoroughly explored, Deffeyes said.

To move the peak of oil production a few decades forward, "they've got to find another Middle East, plus another North Sea on top of that," Deffeyes said.

Note to Darth Kunstler:

If his prediction turns out to be correct, Deffeyes still is not predicting a long-term apocalypse. "On a 20-year time scale," he said, "we'll figure out a lot of things."

Instead of the wells running dry, CERA says petroleum supplies will be expanding faster than demand over the next five years, according to an analysis oil field by oil field. In good news for the SUV set, the new oil will be light, sweet crude - ideal for making gasoline. And since supply will grow, CERA forecasts prices will fall, possibly below $40 a barrel.

"We expect supply to outpace demand growth in the next few years, which would take the pressure off prices around 2007-2008 or thereafter and even lead to a period of price weakness," says Peter Jackson, a coauthor of the report.

Still, CERA maintains that higher prices are encouraging production and that technology is helping to capture oil from older fields. It foresees non-OPEC production expanding rapidly through the rest of the decade, particularly as new supplies come onstream from Russia, the Caspian, Brazil, Angola, and Canada.

Much of the production increase is already starting to happen as oil-rich nations begin to dig deeper and produce faster. According to the report, there are approximately 20 to 30 new major projects (producing more than 75,000 barrels per day) coming onstream every year until 2010. These will add 3 million to 4 million barrels of oil per day each year.

Over the next five years, there will be 10 million barrels per day of new light or medium crude and 3 million barrels per day of new heavy crude. Altogether, supply will exceed demand by 6 million to 7.5 million barrels per day later in the decade, according to CERA.

While many of the oil-depletion theories claim that Saudi production will falter, CERA predicts that the oil-rich nation will expand its production by as much as 2 million barrels of oil per day by 2010. In fact, the CERA analysis concludes that OPEC production will expand the fastest - to 45.6 million barrels per day, up from 36.8 million last year.

But because of political uncertainty, it has shaved its estimates for oil production from Russia. Any decline of Russian crude production would also be mirrored by a continued decline in production from other non-OPEC countries, such as the United States.

CERA does not foresee an actual "peak" in oil production. Instead, with huge projects coming onstream on a regular basis, it predicts an "undulating plateau" in terms of supply and demand for decades. An "inflexion" point will come in the third or fourth decade of the century, according to CERA.

"There is no indication to suggest peak oil is imminent," says Daniel Yergin, CERA chairman and author of several books on petroleum.

The main risks to its forecast, says Mr. Yergin, are political and operating changes that could delay expansion. If that happens, CERA predicts that oil production will increase by only 11.5 million barrels of oil per day between 2004 and 2010.

CERA chairman Daniel Yergin said the extra supply of oil he anticipates is only part of the solution to relieving the stress in the energy market. He assumes more efficient energy use, particularly in transportation, will be critical to stabilizing prices.

"The way that we consume energy in 2025-2030 is likely to be different," he said.

At the same time, as the supply cushion grows, the Organization of Petroleum Exporting Countries can be expected to rein in production to keep prices from falling too far. "The history of the oil industry is a history of cycles," Yergin said.

The CERA report acknowledges that there will be fewer giant oil fields found and produced after 2010, but it argues that with new technology and multibillion dollar investments the petroleum industry has the ability to provide more than enough supply to meet rising demand for several more decades.

Yergin said the main threat to this supply expansion scenario are geopolitical uncertainties. For example, "Iraq has the potential to be a very big player, but its timing is very uncertain," he said.

"Following development of the current worldwide inventory of major discoveries, we also foresee far more capacity expansion in the medium term from field upgrades than through exploration," Jackson and Esser said.

Both men expect non-conventional sources of crude to play a major role in meeting demand. Those include condensates, natural gas liquids, Canadian oil sands, and the ultra-deepwater. Those sources could account for nearly 35% of supply by 2020, CERA said.

CERA said it doesn't accept the view that world oil production is close to a peak. Rather, the analysts see the so-called "inflexion" point materializing in the third or fourth decade of the century, and in contrast to a "peak", they expect an "undulating plateau" to persist for several decades.

"One of the biggest challenges will be to find the giant projects of the next decade, which will put great pressure on the search for high-quality, significant opportunities that in themselves meet the criteria of 'big," Esser and Jackson said.

After analyzing the data, CERA predicted that the capacity of the Organization of Petroleum Exporting Countries will rise to 45.6 million barrels per day in 2010 from 36.8 million barrels per day in 2004.

The analysts expect non-OPEC capacity to quickly increase by the end of the decade with additions of 7.5 million barrels per day to 55.8 million barrels per day.

Calling Saudi Arabia "underexplored," the analysts predicted that the kingdom's capacity for production would increase by 1.5 to 2 million barrels per day to 12.5 million barrels per day in 2010.

Additionally, there are about 20 to 30 major projects coming on line every year between now and the end of the decade.

"The balance of supply over demand has the potential to expand significantly over the next five years, and this could drive oil prices to the downside," the authors found. "If demand growth averages a relatively strong 2.2% through 2010, prices could weaken from recent record highs and slip well below $40 a barrel as 2007 to 2008 nears."

Total capacity will surge by almost 20 per cent to 101.5 million barrels a day by 2010, the widely respected and closely followed consultancy predicted, basing its assessment on field-by-field research. In 2010, capacity could be seven million barrels or so higher than demand -- a huge surplus.

The significant capacity gain is expected to come on the back of a long slate of massive development projects, including Canadian Natural Resources Ltd.'s Horizon oil sands project, among the 10 biggest on the go anywhere.

More than half of the additional oil will come in the form of light oil, the most valuable kind that is the easiest to turn into gasoline and jet fuel. The consultancy also said "unconventional" oil supplies -- such as those in the Alberta tar sands -- will be much more important than people think, as will output from ultra deepwater oil wells, more than 700 metres below the seabed. Other positive factors include getting more oil out of existing fields.

Technical guru John Murphy says the next stop is likely $70. There is a lot of talk like this going around. He may be right, as to get firmly across $60 is going to require a kicker of some sort, and that kicker may just kick us right up.

Finally, Cambridge Energy Research out with a report that any peak is likely to be beyond 2020. Their argument basically relies on the idea that between new fields coming on, enhanced recovery techniques being applied, natural gas liquids, oil from various forms of oil sands, and deep deepwater oil, the world will again be oversupplied with oil, and prices will fall sometime in the 2007-8 timeframe. Any peak is likely to be beyond 2020.

I tend to agree with their ideas, and I was actually going to write as much when I got around to it. Their price projections seem to build in a lot going right though, and they acknowledge that with the observation that the risk lies "above ground".

(I found many of these on The Oil Drum, where the CERA article apparently got Prof. Goose a little hot under the collar.)

Pentagon sources today confirmed off the record that United States Special Forces have been deploying into an undisclosed foreign nation in preparation for an invasion and eventual takeover(s). Our sources would not confirm the location, but did rule out any location in the Middle East.

Speculation revolves around various locations in and around Calgary, Canada, where what are described as "American sounding males and females, business-like dress, lots of papers and briefcases, driving high-end rental vehicles" have been spotted in large numbers in local luxury hotels. Rumors circulating in town have them meeting with various local dignitaries and working deals in the event of an actual takeover.

US Special Forces performed a similar role before the invasion of Afghanistan, hitting the ground before the eventual US takeover, disguising themselves in the local garb, living among the locals and arranging deals with local tribes to ally them against the Taliban.

Saturday, June 18, 2005

"The market is riding a wave of sentiment," said Tim Evans, senior energy analysts at IFR Markets. "Actual production is rising, inventories are higher, even the build in distillates is 800,000 higher than last year, so where is the shortage?"

According to Evans, some of the oil price hike is based on chatter about "peak oil," a theory that world oil reserves have reached their peak and will gradually decline until the world eventually runs out of it completely.

Evans applied a calculation to data from BP's (BP:NYSE - commentary - research) latest annual statistical review of world oil, showing that in 1980, there were 29.5-years worth of oil reserves at that year's consumption rate, while in 2004, there were 40-years worth of oil reserves at 2004 consumption rates.

In 1980, world oil reserves were estimated at 667.1 billion barrels, while in 2004 estimates show 1.18 trillion barrels are still in the ground, BP's report shows.

"There is no evidence that the exhaustion of resources is imminent," Evans said. In fact, recovery rates keep growing as sophisticated technologies have made more of the globe's surface accessible, such as deepwater drilling in the outer continental shelf.

P.S. Tim Evans of IFR Markets has been consistently wrong. That makes him the guy to watch:

Sunday, June 12, 2005

A thorough, well written piece on oil from Arthur Berman, editor of the Houston Geological Society (HGS) Bulletin, questioning the idea that Peak Oil is the current problem. This is probably the best 'attack' on Peak Oil I have read, which is not actually saying much. Nonetheless, I think it is well worth reading, as I think the authors' ideas have validity.

Ultimately, it does not refute the idea that oil prices will be higher and chaotic in the future, though the author believes this is not due to Peak Oil, instead due to limited refining capacity, the most promising regions being off-limits for exploration by major oil co's, and the bumbling nature of most nationalized oil co's.

SPK: As you are labeled as an investment banker I want to ask you who is going to profit from this and where should investors look to put their money?

MRS: The money that needs to be spent on this problem will create some very healthy companies. It won't be good for all the companies. I think the majors have themselves in a very serious box. They are too big. And they cannot acquire with high oil prices. I don't like the majors. Over the next year, the majors will do well in the stock market, but I think being small is beautiful. If you are small you are still nimble enough to have real growth. The service industry, are the foot soldiers and the refiners are the toll gate of being able to create a stable crude stream into high quality products. Like Valero. Any of the independent refiners, too.

DaimlerChrysler on Tuesday unveiled a diesel concept car that gets more than 70 miles per gallon, reduces some pollutants by 80 percent, seats four and looks like something that popped out of a Caribbean reef — only magnified.

The fully functional car was on display at a company technology exhibit in Washington, D.C. DaimlerChrysler said it had no plans to mass produce the vehicle, but that some of the technology would show up in future vehicles.

84 mpg on highway

The low drag and lightweight components are key reasons for the fact that the 140 horsepower concept car gets 20 percent better mileage than other diesels of its size, DaimlerChrysler said.

The vehicle also uses a new diesel filter technology that reduces smog-causing nitrogen oxide emissions by up to 80 percent, the company said. A mixture based on animal urine is sprayed into the exhaust system, neutralizing the nitrogen oxides into harmless nitrogen and water.

Monday, June 06, 2005

An interesting point for investors is that, Groppe says that as a result of the Iranian Revolution, “something like 30% of the value of the S & P in 1980 was the energy sector, and today its more like 6%-7%, and significantly last year the energy sector generated 23% of all of the earnings of the S & P 500.” “We expect it to rise to the 15%-20% range” in the future.

Going right along with this bullishness on the energy sector, and historical low point for the weighting of the energy group in the S & P, Groppe says, “I think the easy oil has been found, but in general, in our work, we conclude that oil and gas assets are still significantly undervalued based on the long term price outlook that we see.”

To get a little bit more specific, Groppe’s favourite group is the Canadian oil patch. “We would classify Canada as perhaps possessing the most attractive combination of circumstances for energy investment of any place in the world. It is only a quarter as intensely drilled and exploited as the United States” and “I suspect that in the next several years the oil sands reserves will be raised to be higher than Saudi Arabia’s.” In that same vein, Groppe predicts “within 10 years we have Canada as being the largest non-OPEC producer in the world outside of Russia.”

The man puts his money where his mouth is, and says that “90% of all of my equity investment assets are in energy, and 65% of that is Canadian.” He also says, “We think there is still a good long run ahead with the kinds of prices that we see”, which should be a positive, and somewhat comforting for investors in the area, considering Groppe’s enviable and unmatched oil forecasting record, both in longevity and accuracy.

Speculators and consumers have been steadily buying up long-dated crude oil futures since mid-2003, pushing them to record highs.

Over-the-counter energy market traders say the same. "The entire flattening of the curve shows a belief that long term oil prices will be high," said one dealer.

Open interest in December 2010 sits at 21.4 million barrels, using the most recently available data, more than triple the 6.8 million seen for the December 2008 contract at this time in 2003, when that future had the same time to run before delivery.

This has flattened off the forward curve for crude futures.

Analysing the current curve is made more complicated by the presence of a heavy contango in the first six months -- a discount for prompt futures driven by plentiful supply of physical crude in the U.S. Gulf.

But looking past this at the December 2005-December 2006 spread shows that this part of the curve has flattened dramatically in the past 12 weeks.

The Greenspan Conundrum

Lacy Hunt, of Hoisington Management, tells me that the Leading Economic Indicators from ECRI are now down year-over-year. This has happened 10 times in the modern era, and we have had seven recessions and two serious slowdowns following those events. (The other was during the Iraqi War and we had massive stimulation after a recession. No such future stimulation is possible.) Further the OECD's world leading economic index is down from projecting 7% growth to only 0.1%, a rather dramatic drop. It will probably go negative when we get the data in April.

Strategists perplexed as 10-year yield falls

"Most of us are scratching our heads wondering why the yield is down here around 4%," says John Caldwell, chief investment strategist at McDonald Financial Group.

Normally, when the economy is growing and the Fed is in tightening mode, long-term rates rise.

But "Something else is driving (long-term) rates other than economic data points," says Bill Dawson, vice chairman of fixed income at Federated Investors.

Robert Gahagan, director of taxable bond investments at American Century Investments, offers another selling point for bonds: They are up for the year, while the major U.S. stock indexes are down. "There is safety in Treasuries," he says.

Bond Yields Plunge Amid Falling Rates World-Wide

But economists are baffled by the behavior of long-term rates. "It's a mystery," said Raghuram Rajan, research director of the International Monetary Fund. "You need a combination of relatively low inflation and relatively low expected growth to explain where rates are."

Manufacturing activity was the slowest in two years world-wide in May, J.P. Morgan Chase said yesterday, based on reports from purchasing managers around the world. Fed officials believe the slowdown in the U.S. is a temporary response to high factory inventories. Others blame high energy prices, which are pressuring profit margins. Yesterday, crude-oil prices jumped $2 per barrel.